Halifax Central Library Project – An Economic Impact ...halifaxcentrallibrary.ca/...Central-Library-Economic-Impact-Assessme… · The construction phase economic impact was simulated

Economic Impact Assessment - Halifax Central Library Project

Canmac Economics Limited Page | 1

The purpose of this report is to document the economic impact of the proposed

Central Library Project.

Canmac’s assessment of the project’s economic impact is estimated by

simulating the construction and operational expenditures using the Nova Scotia

Input-Output Model.

The major findings of this report are as follows:

1. During the construction phase the project will create:

Total employment of 422 jobs.

Total household income of $16,752,042.

Total Provincial Gross Domestic Product of $40,605,371.

2. For a typical year of operation the project will create:

Total employment of 175 jobs.


Total Provincial Gross Domestic Product of $11,102,394.

3. Over 13 years the project will create, through the Federal share,

incremental household income benefits of $16,478,011.

4. In addition to the economic impact, the project has significant legacy

impacts. The Central Library Project will:

Build a strong urban core – a key component of the HRM economic

development strategy.

Provide the necessary economic infrastructure for developing

HRM’s creative economy.

Revitalize the business district where it is located.

Executive Summary



The purpose of this report is to provide an economic impact assessment of the

proposed Central Library Project. More specifically, the impact assessment

addresses the total economic impact as follows:

Direct impacts include the jobs and income generated by the project.

Indirect impacts include the production, employment and income changes

occurring in other businesses/industries in the community that supplies

inputs to the project industry.

Induced impacts include the effects of spending by the households in the

local economy as the result of direct and indirect effects from the project.

In addition to the economic impact, legacy impacts are also examined.

The Halifax Central Library Project is intended to replace the current Spring

Garden Road Memorial Library, as the current library is no longer able to

provide an adequate level of service. The new Central Library will act as a

resource center for the people of the Halifax Regional Municipality (HRM), a

Chapter 1 – Introduction

1.1 Introduction

1.2 Overview



driver for the economic revitalization of the downtown area, as well as a new

attraction for tourists visiting the Halifax Regional Municipality.

The planned facility will be much better able to meet current and future demand

for both traditional and evolving library services such as an increasing focus by

libraries on technological services.

Components

The planned facility will be approximately 108,740 square feet and will include:

7 day, 70 hour a week operating schedule;

larger collection, with 200,000 adult, 15,000 teen and 100,000 children

copies;

285 adult and teen computers, plus 50 children computers;

seating for 555 adults, 60 teens and 100 children;

14 meeting/study rooms, seating 488 people and;

1 auditorium with seating for 250.

Our economic impact assessment determines the economic importance of the

sector by measuring key impact indicators which include:

Employment

Household Income

Gross Domestic Product

1.3 Methodology



These are measured as the sum of direct, indirect and induced effects. Figure 1

provides a schematic of the I-O model process. Canmac’s approach assembles

the client data into a consistent accounting format and then conducts a

simulation with the Nova Scotia Input-Output Model. Impact simulations trace

out the indirect and induced effects.

The economic impact assessment is completed for two phases, 1) the

construction phase, and 2) the operations phase. The economic impact

assessment measures the increase in provincial Gross Domestic Product (GDP),

employment (full time equivalents) and household income. The impact analysis

also measures the major fiscal revenues (Federal and Provincial) emanating from

the economic assessment. Finally, the report provides in a qualitative way the

legacy impact of the project.



Figure 1: Economic Impact Process

Direct Sector

Purchases

Goods & Services

Indirect Sector

Employees Spend Their

Incomes

Supplier Purchases Goods & Services

Supplier Employee Spend Their Incomes

Household

Induced Sector

Households Purchase Goods & Services



This chapter sets out the economic impact assessment. The economic impact

associated with the Central Library Project is the sum of the construction phase

and operational phase. The construction phase is a short term impact whereas

the operational phase provides benefits on an annual basis over the life of the

project. The next section provides the construction impact, while Section 2.3

provides the operational impact, Section 2.4 provides the fiscal impact, Section

2.5 discusses the legacy impact and finally Section 2.6 discusses the summary

and conclusions of the Central Library Project.

The construction phase economic impact was simulated using the latest Nova

Scotia Input-Output Model developed by Canmac Economics Limited for the

Nova Scotia Department of Finance. The model is based on Statistics Canada’s

input-output data. Table 2.1 outlines the major construction costs of the new

Central Library. Overall the construction project costs $42.0 million (2008$).

Chapter 2 – Economic Impact

2.1 Introduction

2.2 Construction Impact



Table 2.1

Construction Phase - Central Library Project

Description Area Rate Cost

Program Areas 81,113 SF $104.80 $8,502,000

Gross Up Areas 27,783 SF $81.60 $2,266,000

Shelled Costs 108,896 SF $145.00 $15,790,000

Additional Costs and Allowances $8,468,000

Total Construction Costs 108,896 SF $321.60 $35,026,000

Ancillaries and Soft Costs 108,896 SF $64.33 $7,005,000

Total Project Costs 108,896 SF $42,031,000

Note: Additional Costs and Allowances includes items such as LEED certification,

Landscaping, etc.

Source: Halifax Central Library Building Program and Space Requirements, June 2008,

HOK Planning Group

Table 2.2 provides the construction impact results. The appendix provides more

detailed results. The construction project is expected to be completed in three

years. The total impact is expected to generate:

422 person years of employment;

$16.8 million in household income; and

$40.6 million in GDP.

Table 2.2

Construction Phase - Central Library Project

Impact Direct Total

Employment 223.00 422.00

Household Income (millions) $9.85 $16.75

Gross Domestic Product (millions) $12.32 $40.61

Source: Calculated by Canmac Economics Limited.



The operation of the new library facility provides additional economic output,

employment and income on an annual basis over the life of the project. Table

2.3 provides estimates of the total operating costs. For the life of the project,

annual operating costs are $7.3 million (2008$).

Table 2.4 presents the impact results. For a typical year of operation, the

Central Library creates:


Total GDP of $11,102,394, and

Total employment of 175.1 full time equivalent jobs.

Table 2.3

Annual Operating Costs - Central Library Project

Description Cost

Operating Costs & Supplies $1,589,819

Wage Bill $5,660,757

Total $7,250,576

Source: Provided by Halifax Public Libraries

2.3 Operational Impact



Table 2.4

Operation Impact - Central Library Project

Benefit Direct Impact Total (Direct & Spin-off)

Impact

Household Income $5,660,757 $7,702,345

Employment (Jobs) 113.6 175.1

GDP $6,273,494 $11,102,394

Federal Tax Revenue $827,659 $1,126,159

Provincial Tax Revenue $832,143 $1,132,261

Source: Calculated by Canmac Economics Limited

In addition to the impact economic activity has on household income, GDP and

employment, governments are able to generate revenues through taxes arising

from the economic activity. Those taxes are accounted for in this report at both

the Federal and Provincial levels. The Federal and Provincial governments are

able to generate tax revenues through income taxes on wages earned during

both the construction and operating phases as well as through taxes on supplies

purchased to construct and operate the new Central Library.

The Federal Government will generate $2,449,315 in total taxes during the

construction phase of the new Central Library and will also continue to generate

$1,126,159 yearly through the operation of the library. Provincially, the

government will generate $2,462,585 during the construction phase and

$1,132,261 yearly while the library is in operation. A detailed breakdown of the

2.4 Fiscal Impact



fiscal impact of the Central Library is found in Table 2.5. The I-O Model output

printouts found in the appendices give a further breakdown of Table 2.5

including the amount of income tax generated.

Table 2.5

Fiscal Impact - Central Library Project

Federal Provincial

Direct Indirect Total Direct Indirect Total

Construction Phase

$1,439,978 $1,009,337 $2,449,315 $1,447,780 $1,014,805 $2,462,585

Operating Phase

$827,659 $298,501 $1,126,159 $832,143 $300,118 $1,132,261


In addition to the construction and operational economic impacts associated with

the Central Library Project, there are a number of legacy impacts. Legacy

impacts refer to the contribution of the library project to the broader long term

social and economic goals of the HRM. Legacy impacts are, by definition, more

qualitative than the construction and operational impacts.

The HRM Central Library Project is a major addition to the HRM’s Art and

Culture Sector and knowledge infrastructure. Table 2.6 compares the current

library circulation with other capital cities. As shown in Table 2.6, Halifax

Public Libraries is one of the busiest library systems in Canada with a circulation

of 4.6 million. On a per capita basis, the Halifax library circulation is the third

highest for capital cities.

2.5 Legacy Impacts



Table 2.6

Halifax Public Libraries Circulation Comparison (2007/08)

Cities Circulation Circulation

Per Capita

Edmonton Public Library 9,639,141 13.198

Halifax Public Libraries 4,641,711 12.449

Hamilton Public Library 4,704,842 9.325

Laval Biblioteques de 2,729,317 7.251

Regina Public Library 2,639,971 14.117

Toronto Public Library 28,925,965 11.555

Vancouver Public Library 7,566,168 12.369

Winnipeg Public Library 5,431,786 8.575

Source: Canadian Urban Libraries Council Data

Table 2.7 shows growth over time. Visitors to the Spring Garden Road Memorial

Public Library increased from 382,764 in 1999-2000 to 428,430 in 2008-2009,

an 11.93% increase.



Table 2.7

10 Year Statistical History – Spring Garden Road Memorial Public Library and Halifax

Public Libraries

Visits (In-person) Circulation

Spring Garden Road System-Wide Spring Garden Road System-Wide

1999/2000 382,764 1,973,877 585,856 3,481,665

2000/2001 388,250 1,959,178 585,401 3,496,490

2001/2002 423,888 2,120,009 600,020 3,880,678

2002/2003 433,145 2,229,986 642,677 4,362,100

2003/2004 427,914 2,313,004 631,689 4,298,089

2004/2005 449,421 2,391,849 635,037 4,470,926

2005/2006 448,660 2,472,379 663,514 4,638,572

2006/2007 414,274 2,365,903 674,870 4,582,175

2007/2008 418,118 2,369,249 698,085 4,641,711

2008/2009 428,430 2,372,967 717,856 4,826,701

% Change 11.93% 20.22% 22.53% 38.63%

Source: Halifax Public Libraries

Based on a review of the central library projects in other areas the major legacy

benefits are as follows.

1) Building a strong urban core.

2) Economic infrastructure for the creative economy.

3) Revitalization of business districts.

Building a strong urban core

The HRM’s economic development strategy involves the development of a

strong urban core as a strategy to attract visitors to the Halifax region. The

proposed Central Library Project is a key component of this strategy. A recent

report completed for the HRM – “HRM Capital District Public Facilities Needs &



Opportunities Strategies” concluded in its review of development strategies in

other cities:

“In both London and Victoria, the redevelopment of a central library

has been a core element in downtown facilities planning. In both

cases the library is (or will be) integrated with other uses in a

mixed-use development. The location of the library amidst retail

uses is seen as mutually beneficial because each attracts a high

pedestrian traffic.”

Economic Infrastructure for the Creative Economy

Urban economies, like the HRM, to be successful in the future will move

increasingly from an industrial economy to a creative economy. As the city

moves in this direction, the importance of a central library increases in value. A

central library becomes a basic economic infrastructure required to grow the

creative economy in much the same way that roads support port activity.

Urban Neighbourhood Impacts

The Central Library Project will have direct employment of 114 and attract

millions of visits on an annual basis. Both of these effects will significantly

enhance and revitalize the downtown neighbourhood that the facility is located

in.



The HRM Central Library Project provides significant economic benefits to the

HRM. The project creates total construction household income of $16,752,042

and operational household income for a typical year of $7,702,345. As shown in

Table 2.8, over the construction period and the ten year period after, the facility

becomes operational; the project in net present value terms creates $49,434,035

in benefits. From a regional perspective, the financial support from the HRM

and Nova Scotia results from household income taxes that would likely have

alternative expenditure options in the regional economy. Hence the federal

share (1/3) is the portion that would be considered incremental to the region.

Given the projected Federal government’s share of 1/3 ($14.01 million), the

incremental household income from the Central Library is 1/3 of $49,434,035 or

$16,478,011.

2.6 Summary & Conclusions



Table 2.8

Central Library Economic impacts by Year

Phase Year Household Income Employment (jobs) GDP

Construction 1 $4,188,010 105.5 $10,151,343

Construction 2 $8,376,021 211 $20,302,685

Construction 3 $4,188,010 105.5 $10,151,343

Operation 4 $7,702,345 175.1 $11,102,394

Operation 5 $7,702,345 175.1 $11,102,394

Operation 6 $7,702,345 175.1 $11,102,394

Operation 7 $7,702,345 175.1 $11,102,394

Operation 8 $7,702,345 175.1 $11,102,394

Operation 9 $7,702,345 175.1 $11,102,394

Operation 10 $7,702,345 175.1 $11,102,394

Operation 11 $7,702,345 175.1 $11,102,394

Operation 12 $7,702,345 175.1 $11,102,394

Operation 13 $7,702,345 175.1 $11,102,394

NPV $49,434,035 $84,888,675

Note: All figures are in 2008 dollars, exclusive of inflation.

Note: NPV is Net Present Value of the Project using a 10% discount rate.


Hence, for every $1 spent on Federal construction, the project creates $1.176 in

household income.



APPENDIX A

DETAILED IMPACT ANALYSIS

CONSTRUCTION OVER 3 YEARS



Note: I-O Model Inputs, Hard construction costs were discounted 15% and ancillaries and soft

were discounted 50% to account for margins.























APPENDIX B

DETAILED IMPACT ANALYSIS

OPERATING IMPACTS























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Halifax Central Library Project – An Economic Impact ...halifaxcentrallibrary.ca/...Central-Library-Economic-Impact-Assessme… · The construction phase economic impact was simulated